The Reserve Bank of New Zealand raised its cash rate again yesterday but signalled the end of the cycle:
Westpac's take (in brief):
- The big surprise was in the forward profile, in which the RBNZ strongly suggests that it is on hold from here until at least mid-2024. We see some upside risks to the RBNZ’s view, but for now see the RBNZ on hold in July, with some potential of a 25 point rise in the OCR in August.
- For the first time the Committee held a vote on the OCR decision, debating between no change and a 25 point hike. Two members voted for no change and the others for the 25 point increase. Some members discussed potential upside risks to house prices and the economy from migration, but on balance the MPC felt sufficiently confident that a 5.5 percent OCR will be sufficient to balance those risks.
- We now see the RBNZ on hold in July, but some potential of a 25 point rise in the OCR in August. Should this not eventuate we anticipate the RBNZ to remain on hold until after the election in October. By this time we expect that the housing market and migration pressures will be showing up fairly strongly and require a further adjustment in the OCR to the 5.75-6.00 percent range.
Dates ahead for the RBNZ:
